Hacker News Board Hacker News, browsed like a classic message board
Live data from Hacker News

How to have a billion dollar exit with zero capital gains tax

axiomalpha.com

Post reply on HN
Print view View original

41–50 of 305 posts

Re: How to have a billion dollar exit with zero capital gains tax

#41

Post by hamburglar »

imgabe wrote: post #15
Layke1123 wrote: post #10

Earlier quoted context omitted.

Or...the government is corrupt and used by the wealthy to write loop holes that allow them to escape paying taxes.

If you think it's corrupt for the government to offer incentives for people to invest in underserved areas where they otherwise wouldn't, by all means, write your representatives, or run for office yourself to end this corrupt practice.

Speaking out about it is also a valid action, you know. In fact if you want to be a single issue candidate and actually get elected, it’s probably a requirement.

Re: How to have a billion dollar exit with zero capital gains tax

#43

Post by [deleted] »

econner wrote: post #36

You still owe capital gains on the original proceeds, deferred a few years and with a possible 10-15% basis step up. This isn't zero capital gains tax. If you happen to have a billion dollar exit on your reinvested capital gains that can be tax free, but you're still paying tax on the original gain.

[deleted]

Re: How to have a billion dollar exit with zero capital gains tax

#44

Post by umeshunni »

modeless wrote: post #32

There's an opportunity zone adjacent to Palo Alto that extends into Menlo Park. It has a Four Seasons hotel in it. There are other areas nearby that could use the investment incentive a lot more IMO. Who decided on these zones? Seems totally arbitrary.

I think that's East Palo Alto, a historically low income area: https://opportunitydb.com/zones/06081612100/

Re: How to have a billion dollar exit with zero capital gains tax

#45

Post by sweis »

You can't just base a business in a QOZ and call it a QOZB. It needs to generate 50% of its gross income from within the zone and 40% of its intangible property (e.g. software) must be used for business within a zone.

Further, there are restrictions on what kind of business it can be. It can't be, for example, a golf course or a liquor store.

Re: How to have a billion dollar exit with zero capital gains tax

#47

Post by modeless »

econner wrote: post #36

You still owe capital gains on the original proceeds, deferred a few years and with a possible 10-15% basis step up. This isn't zero capital gains tax. If you happen to have a billion dollar exit on your reinvested capital gains that can be tax free, but you're still paying tax on the original gain.

It might as well be zero when the original "investment" is a token amount you put in at the founding of a startup.

Re: How to have a billion dollar exit with zero capital gains tax

#48

Post by modeless »

umeshunni wrote: post #44
modeless wrote: post #32

There's an opportunity zone adjacent to Palo Alto that extends into Menlo Park. It has a Four Seasons hotel in it. There are other areas nearby that could use the investment incentive a lot more IMO. Who decided on these zones? Seems totally arbitrary.

I think that's East Palo Alto, a historically low income area: https://opportunitydb.com/zones/06081612100/

Yeah but most of East Palo Alto isn't in the zone, and part of Menlo Park is.

Re: How to have a billion dollar exit with zero capital gains tax

#49

Post by HWR_14 »

ars wrote: post #34
Fezzik wrote: post #22

Earlier quoted context omitted.

I think, like most things, it’s a bell curve - the bulk of the people want to contribute a reasonable amount while some want contribute none and some extra. The glaring issue in the United States is how much capital is gained — though I prefer ‘allocated to’, as the people do the work — by a minuscule portion of the population and the paltry taxes they then pay.

"platry"?? The top 10% of the US pays 71% of tax.

Well duh, the top 10% own 89% of the country. Obviously they have to pay a reasonable tax rate.

Re: How to have a billion dollar exit with zero capital gains tax

#50

Post by modeless »

sweis wrote: post #45

You can't just base a business in a QOZ and call it a QOZB. It needs to generate 50% of its gross income from within the zone and 40% of its intangible property (e.g. software) must be used for business within a zone. Further, there are restrictions on what kind of business it can be. It can't be, for example, a golf course or a liquor store.

Seems like you can, as long as you work in the office 50% of the time ("at least 50% of the hours worked by partners, contractors, and employees could take place in an OZ"), and the IP seems to be addressed by this quote from the article: "The IRS’ Final Regulations on QOZB’s gave a rather interesting but nuanced example of an intellectual property holding company with a headquarters in an QZ which DID qualify as a QOZB despite concerns about the 40% intangible property rule. This is a very relevant example for many tech companies [...]"

I'm not going to go read the IRS regulations because I'm not actually planning to implement this scheme but it seems plausible that it might work. As long as there isn't another COVID forcing everyone to work from home...

Post reply on HN